Category: Consistency

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Are You Ready for the Upturn?

Many pundits out there think the economy has hit bottom. If the last couple of cycles are any indication, when things start picking up again, it is going to happen fast. As people scramble to retain or gain market share they are going to want more and want it now.

And, if the last couple of times are any indication, many businesses are going to be caught totally flat footed and struggling to increase their output. I would also imagine that the “never again” vows that they made as things were going down will, once again, go out the window.

So, short of building up a lot of inventory and/or investing in excess capacity, what can you do to be more prepared?

Continue to work toward the ideal of one-piece-flow.

This does a few things for you. If you do it right, you will progressively collapse the throughput time of your process. This will make you more responsive to changes and make you less vulnerable to forecast errors.

More importantly, though, is the understanding you gain as you do this work. You want to know the cycle time constraint of each and every process in the value chain. With that information, you can predict what will constrain you from reaching any given level of production, and start to work on those constraints. That does not mean you increase production, nor does it mean that you add capital equipment. It means you know exactly what you are capable of doing, and exactly what you must do to get to the next level. In other words, you have a plan that you can put into motion at any time.

Work to standardize and stabilize your processes.

This effort helps make your work more ready for people. Many operations today are running well below their capacity, and they have lost their performance edge. Problems are going unnoticed and unaddressed because they aren’t really affecting production right now. That will change, and change fast, in a ramp-up situation.

Worse, unstable and poorly understood processes translate to long, error-prone learning cycles for new people, or current people in doing different work.

Re-energize your daily kaizen and problem solving and start seeking out the things that are disrupting the work. That investment will not only develop your ability to respond quickly and robustly to growth, it will develop people’s skills as well.

Develop your people and organization.

This will help your people become more ready for the work.

Things may be slow today, but do you know who you would put into your next leadership positions as they open up? Have you developed those potential leaders? Have you thought through how you will organize and support the work as business expands?

The more preparation you can make now, the easier it will be when you get into a fast-moving dynamic growth period. You will already have a baseline plan, so you will only need to assess the situation, modify as appropriate, and carry it out. The more of this planning you can do now, the more thinking you will be able to put into execution.

Even people who are already in leadership positions can probably use skills development. There are a few easy things you can do that will pay great dividends in a fast-flux environment.

Look into the TWI programs. These address crucial skills that line leaders need to succeed. Ideally, people would demonstrate those skills before being put into leadership positions.

The side benefit is that these programs give people skills they can use today to make the workplace safer, more consistent, and more stable. In a growth situation, Job Instruction gives you a standard method to bring new people on board, or to flex people quickly into different work and get them up to speed.

Free up as much capacity as possible.

The bottom line results of kaizen are seen primarily in the form of additional capacity – you are able to produce more with the same resources. You might not need that additional capacity right now, but if you are living within your means today, you can put that additional capacity in your hip pocket. Then, the first round of sales growth can be met without any additional resources. The better you are at kaizen, the longer you can hold your resource levels the same while growing output. The only way to get better is to practice, and just like learning to play the piano, this means practice every day.

Understand your supply base.

How well do you know your suppliers? How quickly can they respond if your needs change dramatically? Do you know which supplier controls how quickly you can increase output? Do you know at what point that bottleneck shifts to a different supplier?

The other thing to consider here is the length of that supply chain. If you are bringing in things from overseas, there is one fundamental that many people try to wish away:

No matter how hard you try, you can’t change what is on the boat.

That might seem obvious in saying it, but it is amazing how many times that four or five week transportation time ends up negating any “cost savings” in lower prices.

I am not saying this is good or bad. I am saying to look beyond invoice and transportation prices and understand your enterprise value chain as a dynamic, moving thing with a response time to change. That response time becomes critical when things are changing. Know what that response time is, and manage to it. If you don’t like the answers, you have to alter the system somehow.

Bottom line: The time to get good is now.

When you are scrambling to meet demand, “there won’t be time” for kaizen, and there will be even less time to learn how to do it. The time to get good at it is now. Your alternative is growing your cost structure at least as fast as sales are growing. Experience has shown that your cost structure likely grows faster than sales, and additional earnings come only with non-linear growth – relying on volume to make up for ever thinner margins. That might look OK in the short-term, but it is a strategy of becoming ever less efficient.

The better prepared you are for the upside, the stronger you will be the the inevitable next cycle.

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Problems Hidden In The Open

We were down on the shop floor watching an assembly operation. The takt time was on the order of three hours. The assembler was new to the task, and the team leader periodically came by and asked if he was “doing OK.” The reply was always in the affirmative.

As the takt time wound down to under five minutes to completion, this operation was the only one not reporting “Done.”

The count down hit zero, things went red, the main line stopped, and the line stop time started ticking up.

The team leader, other assemblers, the supervisor began pitching in to assist. Between them, the job was completed in about 10 minutes, and the line restarted.

So, again, my favorite question:

What’s the problem?

Lets try breaking it down to four key questions.

  1. “What should be happening?”
  2. “What is actually happening?”

    3. The above two questions define the gap.

  3. “Why does the gap exist?”
  4. “What are we doing about it?”

These questions simply re-frame PDCA, but without so much abstraction.

So, in this situation:

What should be happening?
Two things come to mind immediately.

  1. The work should be complete on time.
  2. As soon as you know it isn’t going to be complete on time, please tell someone so we can get you help.

For this to work, though, the team member needs a clear and unambiguous way to answer a key question of his own: Am I on track to finish on time? Ideally the answer to this question is a clear “Yes” or a clear “No,” with no ambiguity or judgment involved. (Like any “Check” it should produce a binary result.)

On an automobile line with a takt time on the order of 55 seconds, the assembler can get a good sense of this. If he loses more than three or four seconds, he isn’t going to make it. But “a good sense” isn’t good enough.

Even in this fast-moving situation, you will see visual indicators that help the team member answer this question. Take a look at this photo.

toyota-assy

See the white hash marks along line at the bottom of the picture? Those mark off the moving line work zone into ten increments of about 5 ½ seconds. The assembler knows where he should be as he performs each task. If he is a hash mark behind, he isn’t going to finish on time. Pull the andon. We can safely say that, in this example, we have accomplished (1) and (2) above.

With longer takt times, it is much tougher for a human to have a good sense of how much time will be required to complete the remaining work. That makes it that much more critical that some kind of intermediate milestones are clearly established and linked to time.

What would be a reasonable increment for these checks? –> How far behind are you willing to let your worker get before someone else finds out? I’d say a good starting point is at the point when he can’t recover the time himself, the problem is no longer his. Following the standard work is the responsibility of the team member. Recovering to takt time is the team leader’s domain. At the very least, he is the one who pitches in and helps, or gets someone else to do so. But he can’t do this if he doesn’t know there is a problem.

So – what should be happening?

The team member must have continuous positive confirmation that he is on track to complete the work on time. With the failure of that positive confirmation, he should pull the andon and get assistance.

The team member must call for assistance (“pull the andon”) if his work falls behind the expected progress for any reason whatsoever.

What is actually happening?

In our example, the team member didn’t get help until it was too late. In fact, he verbally assured the team leader he was “OK” on a couple of occasions. The line stop was irrefutable evidence of a problem. That was a good thing. This company has a takt time, and runs to it. Think of what would have happened if they didn’t. It might take hours, or days, before this problem surfaced. (We are nowhere near the root cause yet. The line stop is just evidence of a problem, not the problem itself.)

Why does the gap exist?

It is a hell of a lot harder to answer this question than the other two. In this case, you are going to have to peel back a lot of layers before you get to the actual, systemic, root cause. But in the immediate sense, with a takt time bordering on three hours, there is really no realistic way a worker can judge if he has fallen too far behind to catch up. The fact that, in this case, the assembler was still learning the job, and that just compounds the situation.

From casual observation – when the team leader visited, he asked if things were OK and accepted the reply – I would start to investigate whether the team leader had a good sense himself of where the work should be at his regular check points… if he has regular check points at all.

But all of this is speculation, because after 10 minutes of watching the initial response to the line stop, our little group had moved on. I am mentioning these things as possibilities because you likely have the same issues in your shop. (And if you don’t have a rigorous sense of takt time, it is equally likely you don’t know about those issues even at the level we saw here. At least THIS company can see the evidence of the problem. That is a credit to their visual controls.)

What are we going to do about it?

Obviously there are a couple of immediate things that can be addressed to at least contain the problem. (That is, convert a hard line stop into multiple andon calls so the actual problems are seen earlier.)

I would want to establish a regular routine for the team leader’s checks. His leader standard work. At regular intervals, he should be checking progress of the work. How often? How far behind do you want the assembly to get before you are certain someone finds out about the problem? In this case, even every 20 minutes is less rigorous than the hash marks on the auto assembly line. But it would be a start.

So we have the team leader coming by every 20 minutes.

But he can’t just ask “How is it going?” We clearly saw that didn’t work. It isn’t that the assembler lied to him, it is that the assembler didn’t know because there was no standard.

What work should be complete 20 minutes into the work cycle? At 40 minutes? At 60? What verifiable facts can the team leader check by observation? There are a lot of ways to do this, most of them very simple and non-intrusive. Think it through.

But wait – now the team leader himself has standard work. What cues him to do it? Is he supposed to notice that 20 minutes has elapsed? In this case, the company already has a pretty sophisticated andon and sound system. It would be a pretty simple matter to put in an audible signal that told the team leader to make his checks. But, again, that is just one solution. I can think of a couple of others. Can you?

What is the team leader checking for? This is a critical question.

Think about it.

What was the original answer to “What should be happening?” (which is “the standard”)

We said:

  1. The work should be complete on time.
  2. As soon as you know it isn’t going to be complete on time, please tell someone so we can get you help.

We want the assembler himself to be checking #1.

So why do we have the team leader check?

So he can verify that the assembler is pulling the andon when he should. This is important because it is human nature not to ask for help until it is too late. This isn’t limited to factory floors. How many cardiac patients die because they ignored the warning symptoms for fear that it isn’t serious enough to get help?

It isn’t enough to ask the team member to call for help. You have to expect it, encourage it and require it.

Interestingly enough, as I was writing this post, John Shook posted his story about converting the culture at NUMMI.

A cornerstone of Respect for People is the conviction that all employees have the right to be successful every time they do their job. Part of doing their job is finding problems and making improvements. If we as management want people to be successful, to find problems, and make improvements, we have the obligation to provide the means to do so.

But, some of our GM colleagues questioned the wisdom of trying to install andon at NUMMI. “You intend to give these workers the right to stop the line?” they asked. Toyota’s answer: “No, we intend to give them the obligation to stop whenever they find a problem.” [emphasis added]

What was the problem in our example? We don’t know yet. We certainly can’t start looking for causes.

But the evidence of a problem was that the team member could not complete the work in the time expected. That is, he was not successful doing the job. And the line stopped because the support system failed to pick up the fact that he was falling behind until it was too late to recover.

It really does come down to respect for people.

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If you want to go faster, stop.

Mark’s post on The Whiteboard tells a pretty common story. The good news is that this company has more business than they can handle. Pretty good results in these times. The bad news is that they are having problems ramping up production to meet the demand. In Mark’s words:

I’m working for a company that is very, very busy. They developed a new process that is the first of it’s kind and have taken the market share away from their competition. But they have not spent enough time making the process robust enough to handle the increase demand and the scrap costs are going out of the roof. Currently about 65K a day. Any suggestions? Our number 1 scrap producer is a machine that can not perform at the same capability as when Engineering did their run off…

At the risk of coming across as flip, the very first thing to do if a machine starts producing scrap material is to shut it down.  It is better to make nothing because that is a cheaper alternative than making stuff you can’t use.

However, it goes deeper than that.

Engineering had done a “run off” (which I presume was a test on theoretical speeds). Now actual performance isn’t meeting expectation. This is a problem.

But let’s rewind a bit and talk about how to manage a production ramp-up. Hopefully it is a problem more people will be having as the economy begins to recover.

Although this is in the context of the machine, exactly the same principles apply to any type of production. Only the context and the constraint changes.

Presumably there was some speed for this machine where it didn’t produce scrap, or the scrap was minimal. Going back to that time, here is what should have happened.

Promise production at the rate the machine is known to support.

Now crank up the speed a bit and see what happens. In the best case, you are overproducing a bit, but you are learning what the machine is actually capable of doing.

Crank it up a little more. Oops, scrap.

STOP!

Because you have been running a little faster than required, you have bought a little time. Understand why that scrap happened. Try to replicate it. Dig into the problem solving. Try to replicate the problem under controlled conditions. LEARN.

Hopefully you can find the cause and fix it.

Try it. Run the machine again, at the faster speed. Scrap? Back around to the “problem solving” cycle. Repeat until you can reliably run at the faster speed without scrap.

Then, and only then, promise the higher rate, because now you can reliably deliver it.

Then notch it up a bit until you encounter the next problem.

This cycle of promising only what you can actually deliver protects the customer while you are pushing the envelop internally to discover the next problem.

The alternative? Make a promise knowing you actually have no clue whether or not you can meet it.

But that’s what they did. So now they are burning a lot of money every day making scrap material.

The same principles apply, however. They are already not delivering what they promised. So throttle things back to the point where they can predict the results, and go from there. Pretending they can run faster than they can is not accomplishing anything other than burning money. Deal with facts, no matter how uncomfortable.

If you make a schedule based on what you wish you could do, you will have a schedule you wish you could meet.

No matter what, each time scrap is produced, the fact must be acknowledged. That allows the immediate response that is framed around a simple question:

“How the hell did this happen?”

Put another way, “What have we just learned about the limits of this process?”

It is only within that framework that you actually get any better. Anything else is relying on luck, and in this case at least, that didn’t work.

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Is This a Problem – Part 2

Last week I posted a story of a failed freezer, ruined food, and a customer support experience that could be summed up as “That’s how we do it.” I invited comments and asked:

“Is this a problem?”

And when I say “problem” I mean, is this a “problem” from the standpoint of the company’s internal process?

There are some interesting comments, some about the internal culture of the company, others about the support process itself.

But I promised to offer my thoughts, so here they are.

The key question is “What did they intend to happen?” While we can speculate, unless we have the process documentation or are otherwise privy to that internal information, we really don’t know what they intended in this case.

Let’s assume, for the sake of argument, that Frank’s experience was exactly as the company intended it to be. Then, from the point of view of their internal process, there is no problem.

“Wait a minute!” I can hear, “Nobody wants  a customer to never buy the product again.”

And here is my point. We don’t know. This company may be perfectly willing to accept that consequence, i.e. “fire the customer” to preserve their warranty cost structure. They certainly would not be the first. Whether that is good business or not is a totally separate issue. The question is “Did they produce this result on purpose, as a logical, foreseeable outcome of the process as they designed it?.” If the answer is “Yes, they did” (and only they can know), then there is no problem. It might be bad business, but the process is working just fine. (I acknowledge that “bad business practices” can result in unintended results – like bankruptcy. But my point is the results are the outcome of a process, and the process is the result of a decision, even if that decision was to “not care.”)

The key point here is that only after there is clarity of what should happen, can the process itself even be addressed. Until the intended result is clear, then there is no way to see if the process works or not.

Was there a problem here? I don’t know. But this is what I would like people to take away from this little story.

Whenever something in your company seems “not right” ask this really powerful clarifying question:

“Did (or would) we do this on purpose?“
If the answer is anything other than an unqualified yes then it is likely you have a problem.

Here is a tougher position: If something was unpleasant for your customer, and you don’t intend to fix it, then embrace the truth that you did do it on purpose. Take responsibility for your decisions, look in the mirror, and say “We meant to do it exactly that way, and will do it the same way next time.” If you can’t stomach that, then go back the the first question.

Here is an extra credit question for this little case study in customer support.
What, exactly, did the customer want here?

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The Purpose of a BHAG

In his book Built to Last, Jim Collins explores the characteristics of companies with sustained performance, and introduced the term “BHAG” for “Big, Hairy, Audacious Goal.” (or something close to that 😉  ).

Last week I had the honor and pleasure to spend a day at the Verbeeten Institute, a radiation oncology clinic in Tilburg, The Netherlands. It was clear they have been working very hard on improvement, built on coaching from Blom Consultancy, who were my hosts there.

Every Tuesday, the medical staff gathers for lunch and host a presentation on a topic of interest. Last week, that was me.

Though I had a fair idea where I wanted to go, I didn’t have a structured, prepared speech. I wanted to get started, and then see where the audience led things.

I started off with a somewhat tailored version of my “Project Apollo story” to emphasize the difference between Kennedy’s BHAG challenge and the higher level objective of “world leader in space exploration.”

Then I asked a question – what would be a BHAG for Verbeeten that they could use to drive themselves toward their goal of “World Class Care.” One of the audience members, from the very back, said “First treatment in one day.”

This was pretty radical. The current process of initial consultation, CT scan, preparing a detailed treatment plan, and getting the patient in for his first treatment can take 20+ days today, though the actual patient involvement in the process is only a few hours, actually less if you start sharpening your value-added pencil.

As we started to get general agreement that this might be a good thing, one of the doctors asked a really interesting question.

Why?

In most cases, there isn’t any compelling clinical reason to try to accelerate this process, and in some cases there are pretty good reasons not to. So Why? was a pretty damned good question to ask – why go to all of the trouble. Why does it matter?

Setting aside, for a minute, the logical arguments of an improved patient experience, let’s explore that a bit.

What it comes down to is, not so much the goal itself, but what you have to do to accomplish it.

It makes the organization push itself through thinking, innovation, and into territory that, as things are right now, is unachievable.

In other words, you have to get really good. You have to become intently focused on everything that is distracting from the core purpose of the organization. You have to excel at execution.

The only way to get there is to learn to define what results you want (a “defect free outcome”), what steps are required to achieve it, carry them out, respond immediately when something unprogrammed or unexpected happens, and seek to understand – at a detail level – what wasn’t understood before.

Napoleon Hill is quoted as saying “A goal is a dream with a deadline.” So long as the goal aligns with a sense of higher purpose, and people can emotionally get behind it, they are a great help in simplifying the message and keeping everyone focused. Deming famously walked about “consistency of purpose.” This is one way to show it.

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Cool Email Mistake Proofing

My main desktop computer runs Ubuntu Linux. The default email client is called Evolution. A recent upgrade introduced a very cool feature. When I hit “Send” it looks for language in the email that might indicate I meant to include an attachment. If there is no attachment, it pops up this handy reminder:

screenshot-attachment-reminder

Maybe Microsoft Outlook does this too, I haven’t used the latest version, so I don’t know. But in any case, this is a great example of catching a likely error before it escapes the current process. I can’t count the number of times I have hit “Send” only to get an email reply “You didn’t include the attachment.” Obviously I was about to do it again, or I wouldn’t be writing this. 😉 Since I am sending out things like resumes right now, that is something I would really like to avoid.

When talking about mistake proofing, or poka-yoke, there are really three levels.

The first level prevents the error from happening in the first place. It forces correct execution of the correct steps in the correct order, the correct way. While ideal, it is sometimes easier said than done.

The next level detects an error as it is being made and immediately stops the process (and alerts the operator) before a defect is actually produced. That is the case here.

The third level detects a defect after it has occured, and stops the process so that the situation can be corrected before any more can be made.

Each has its place, and in a thorough implementation, it is common to find all of them in combination.

Related to this are process controls.

Each process has conditions which must exist for it to succeed. Having some way to verify those conditions exist prior to starting is a form of mistake-proofing. Let’s say, for example, that your torque guns rely on having a minimum air pressure to work correctly. Putting a sensor on the air line that shuts off the gun if the pressure drops below the threshold would be a form of stopping the process before a defect is actually produced.

A less robust version would sound an alarm, and leave it to the operator to correctly interpret the signal and stop the process himself. Your car does this if you start the engine without having the seatbelt fastened. (back around 1974-75 the engine would not start (see above), but too many people (i.e. Members of Congress) found this annoying so the regulation was repealed.)

Consider the question “Do I have all of the parts and tools I need?” What is the commonly applied method to ensure, at a glance, that the answer to this question is “Yes?”

If you answered “5S” then Ding! You’re right. That is one purpose of 5S.

A common question is how mistake-proofing relates to jidoka.

My answer is that they are intertwined. Jidoka calls for stopping the process and responding to a problem. Inherent in this is a mechanism to detect the problem in the first place.

The “respond” part includes two discrete steps:

  • Fixing or correcting the immediate issue.
  • Investigating, finding the root cause, and preventing recurrance.

Thus, the line stop can be initiated by a mistake-proofing mechanism (or by a person who was alerted by one), and mistake-proofing can be part of the countermeasure.

But it is not necessary to have mistake proofing to apply jidoka. It is only necessary for people to understand that they must initiate the problem correction and solving process (escalate the problem) whenever something unprogrammed happens. But mistake-proofing makes this a lot easier. First, people don’t have to be vigilant and catch everything themselves. But perhaps more importantly, they don’t have to take the (perceived) psychological risk of calling out a “problem.” The mechanics do that for them. It is safer for them to say “the machine stopped” than to say “I stopped the machine.”

Back to my email…

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Setting Up For Success (or failure)

Remember when, a few short months ago, everyone was too busy taking orders and building up all of that inventory that you see out of your window now? Times have changed.

Then again, very few can claim lack of a “burning platform” now. Platform? Today it is more about getting out of the building alive!

Still, a few organizations are trying to drive change into the way they operate, and many more will fail than succeed.

The reasons why this is true were articulated by John Kotter back in 1995 in his now classic article Leading Change: Why Transformation Efforts Fail.

The short list is:

  1. Establishing a sense of urgency.
  2. Forming a powerful guiding coalition.
  3. Creating a vision.
  4. Communicating the vision. (Over-communicating!)
  5. Empowering others to act on the vision.
  6. Planning for and creating short-term wins.
  7. Consolidating improvements and producing still more change.
  8. Institutionalizing new approaches.

The question, then, becomes “Are you deploying effective countermeasures against these known failure points?”

I would like to share an exercise I used (admittedly improvised as I went) with a company leadership team a few years ago. It ended up really hitting them between the eyes with the gap between their perception and the reality.

Prior to the day, I had them all read the article.

We spent some time discussing and understanding each of the eight points Kotter discusses.

Then I had each of the little sub-teams we had break out and score how effectively they felt they were dealing with each of these eight items. For example, how well did they rate themselves on “Communicating the vision?” It was a simple numeric rating, 1-5.

Each sub-team then debriefed the group, and found everyone was pretty close to consensus.

In the meantime, we had another group going through the same exercise. This group consisted of the direct reports of the top leadership team.

We compared the numbers. They were very different.

The leaders rated themselves as being pretty effective. Their direct reports were not so kind. We didn’t do it, but it would have been interesting to do the same thing another level down again.

The leaders gained a decent understanding of the huge gap that existed between what they thought they were doing vs. how it was being read by their staff. What the leaders thought was a clear, crisp “change” message was pretty mushy by the time it was filtered through words vs. actions.

Try it in your organization. Assess yourselves. Then do the same assessment with another group a couple of levels closer to reality. See what you get.

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Management by Measurement vs. a Problem Solving Culture

As I promised, I want to expand on a couple of great points buried in John Shook’s new book Managing to Learn, published by LEI.

A while back I commented on an article, Lean Dilemma: System Principles vs. Management Accounting Controls, in which H. Thomas Johnson points out that

Perhaps what you measure is what you get.
More likely, what you measure is all you get. What you don’t (or can’t) measure is lost.

In his introduction to the book, Shook describes the contrast:

Where the laissez-faire, hands-off manager will content himself to set targets and delegate everything, essentially saying, “I don’t care how you do it, as long as you get the results,” the Toyota manager desperately wants to know how you’ll do it, saying “I want to hear everything about your thinking, tell me about your plans.”

and a little later:

This is a stark contrast to the results-only oriented management-by-numbers approach.

Shook then also references H. Thomas Johnson’s paper. (like minds?)

But I would like to dive a little deeper into the contrast of leadership cultures here.

Let’s say the “management by measurement” leader thinks there is too much working capital tied up in excess inventory.

His countermeasure would be to set a key performance indicator (KPI) of inventory levels, or inventory turns, and “hold people accountable” for hitting their targets.

Since there is little interest expressed in how this is done, the savvy numbers-focused subordinate understands the accounting system and sees that inventory levels are taken at the end of each financial quarter, and those levels are used to generate the report of inventory turns. This is also the number used to report to the shareholders and the SEC.

His response is to take actions necessary to get inventory as low as possible during the week or on the day when that snapshot is taken. It is then a simple matter to take actions necessary. A couple of classics are:

  • Pull forward orders from next quarter, fill and ship them early.
  • Slow down (or even stop) production in the last week or two of the quarter.
  • Shift inventory from “finished goods” to “in transit” to get it off the books.

While, in my opinion (which is all that is), actions like this are at best deceptive, and (when reported as true financial results) possibly bordering on fraud, the truth is that these kinds of things happen all of the time in reputable companies.

So what is the countermeasure?

In a “management by measurement” culture, the leader (if he cares in the first place), would respond to put in additional measurements and rules that, hopefully, constrain the behavior he does not want. He would start measuring inventory levels more often, or take an average. He would measure scheduled vs. actual ship dates. He would measure “linearity” of production.

Fundamentally, he would operate on the belief that, if only he could measure the right things, that he would get the performance he needs, in the way it should be done. “The right measurements produce the right results.”

While not universal, it is also very common for a work environment such as this one to:

  • Attach substantial performance bonuses to “hitting the numbers.”
  • Confuse this with “empowerment” – and perceive a subordinate who truly wants help to develop a good, sound plan as less capable than one who “just gets it done.” He is seen as “high maintenance.” (“Don’t come to me with problems unless you have a solution.”)
  • Look for external factors that excuse not hitting the targets. (Such as an increase in commodity prices.)
  • Take credit for hitting the targets, even when it was caused by external factors. (Such as a drop in commodity prices.)

Overall, there is no real interest in the assessment of why there even is a gap between the current value and the target (why do we need this inventory in the first place?); and there is even less interest in a plan to close the gap, or in understanding if success (or failure) was due to successful execution or just plain luck.

The higher-level leader says he “trusts his people” and as such, is disengaged, uninformed, and worse, is taking no action to develop their capabilities. He has no way to distinguish between the people who “hit the numbers” due to luck and circumstances (or are very skilled at finding external factors to blame) and the ones who apply good thinking, and carry out good plans. Because the negative effects often take time to manifest, this process can actually bias toward someone who can get good short-term results, even at the cost of long-term shareholder value.

This is no way to run a business. A lot of businesses, some of them very reputable, are run exactly this way.

So What’s The Alternative?

Shook describes a patient-yet-relentless leader who is determined to get the results he wants by developing his subordinate. He assigns a challenging task, specifies the approach (the “A3 Problem Solving Process”) then iterates through the learning process – while applying the principle of small steps. At no point does he allow the next step to proceed until the current one is done correctly.

“Do not accept, create, or pass on poor quality.”

He has a standard, and teaches to that standard.

He is skeptical and intently curious – he must be convinced that the current situation is understood.

He must be convinced that the root cause is understood.

He must be convinced that all alternative countermeasures were explored.

He must be convinced that everyone involved has been consulted.

He must be convinced that all necessary countermeasures are deployed – even ones that are unpopular.

He must be convinced that the plan is being tracked during execution, results are checked against expectations, and additional countermeasures are applied to handle any gaps.

And he must be convinced that the results came as an outcome of specific actions taken, not just luck.

In short, even though he might have been able to do it quicker by just telling his subordinate what to do, in the end, that Team Member would only know his boss’s opinion on a particular solution for a specific issue… he would not have taught how to be thorough.

The Learning Countermeasure

If we start in the same place – too much inventory, too few turns – the engaged leader starts the same way, by setting a target.

Then he asks each of his subordinates to come back to him with their plan.

By definition that plan includes details of their understanding of the situation – where the inventory is, why it is. It includes targets – where the effort will be focused, and what results are expected.

The plan includes detailed understanding of the problems (causes) which must be addressed so that the system can operate in a sustainable, stable way, at the reduced inventory levels.

It includes the actions which will be taken – who will do what by when, and the results expected from those actions. It may include other actions considered, but not taken, and why.

It includes a process to track actions, verify results, and apply additional countermeasures when there is a barrier to execution or a gap in the outcome.

The process of making the plan would largely follow the outline in Managing to Learn. The engaged leader is going to challenge the thinking at each step of the process. He is going to push until he is convinced that the Team Member has thoroughly understood – and verified – the current situation, and that the actions will close the gap to the targets.

Rather than assigning a blanket reduction target, the engaged leader might start there, but would allow the Team Members to play off each other in a form of “cap and trade.” The leader’s target needs to get hit, but different sectors may have different challenges. Blanket goals rarely are appropriate as anything but a starting point. But it is only after everyone understands their situation, and works as a team, that they could come up with a system solution that would work.

Of course then the Team Members who had to take on less ambitious targets would get that much more attention and challenge – thus pushing the team to ever higher performance.

Today’s World

Even in companies deploying “lean”, the quality of the deployment is dependent on the person in charge of that piece of the operation. When someone else rotates in, the new leader imposes his vision of how things should be done, and everything changes.

There are, in my view, two nearly universal points of failure here.

  • The company leadership had an expectation to “get lean” but, above that local level, really had no idea what it means… except in terms of performance metrics. This is often wrapped in a facade of “management support.” Thus, there is no expectation that an incoming leader do things in any particular way. (What is your process to “on board” a new leader prior to just turning him loose with your profits and losses?)
  • The outgoing leader may have done the right things in the wrong way – by directing what was to be done vs. guiding people through the process of true understanding.

Fixing this requires the same thinking and the same process as addressing any other problem. Just trying to impose a standard on things like production boards isn’t going to work. The issue is in the thinking, not in the tools.

Conclusion

You get what you measure, but don’t be surprised if people are ingenious in destructive ways in how they get there.

You can’t force a solution by adding even more metrics.

Only by knowing what you did (the process) will you know why you got the results you achieved (or did not achieve). This is a process of prediction, and is the only way people learn.

Learning takes practice. Practice requires humility and a mentor or teacher who can see and correct.

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The Power of Vision

In the last post I brought up the advantage of having a long range plan vs. quarter-to-quarter thinking. I’d like to explore the concept a little more by way of an analogy.

Put yourself in the spring of 1961.
The USSR, by all demonstrative measures, is ahead of the USA in human space flight, and seems to be increasing that lead. On April 12, Yuri Gagarin orbited the Earth. On May 5, Alan Shepard went up, and came down on a 15 minute trajectory.

At the time, there were important geo-political reasons for establishing a public perception of technological leadership, and space exploration seemed to be the place to do it.

On May 25, President Kennedy made a public commitment to regain, and maintain, that leadership. He could have done it with corporate-speak:

This nation will become the world leader in space exploration.

But he didn’t. He said:

“I believe that this nation should commit itself, to achieving the goal, before this decade is out, of landing a man on the moon, and returning him safely to the Earth.”

Only the second statement is actionable. Only the second statement carries the possibility of failure. And only the second statement galvanizes action. In pursuing that goal with that degree of commitment, it achieved the first – to demonstrate world leadership in space exploration, not with words, but with action.

Of course the first statement carries no risk, since there is no actual performance requirement. Perhaps that is why corporate-speak carries that kind of language today. The shareholders can’t fire the board for not achieving something that was never articulated. The statement leaves open the capability to re-define the goal so that it matches what was actually done – something that happens all too often in today’s world.

So when one company says “We are going to sell more products next year.” and another says “We are on year 2 of our 10 year plan to be #1 in sales with 15% market share.” which one do you think can align actions of the people in the company?

To continue, when Kennedy made that speech:

  • The United States had a human space flight experience totaling 15 minutes.
  • The world had human space flight experience totaling under 2 hours.

Nobody actually knew, for sure, what the moon was made of.

To be sure, the visionaries within NASA had been thinking about sending someone to the moon for a long time. And in May, 1961 there were competing strategies in play at NASA for getting it done. They either involved an unimaginably HUGE rocket (think twice the size of the one that actually did it), or two or three Saturn class rockets to launch and assemble the lunar spacecraft in orbit. But when faced with a deadline of “before this decade is out,” the challenges were immense. Another strategy, considered a bit crackpot at the time, was named “lunar orbit rendezvous.” It involved a smaller (but still huge) rocket to send a throw-away lander on the moon along with a re-entry capsule. The capsule remains in lunar orbit, the lander lands, takes off, docks with the capsule. The crew transfers to the capsule, and they head home. As each piece fulfilled its intended purpose, it would be discarded.

It became increasingly clear, in the months that followed the speech, that neither of the “mainstream” approaches would get the job done with the time and resources available.

During the summer, consensus formed around the lunar orbit rendezvous scenario.
Key Point: Once they decided to pursue that option all further pursuit of the others was stopped. They committed. They did not have the resources to do otherwise.

In the corporate world, how often does that happen? Once a project, or even an idea, has any kind of resourcing or momentum behind it, stopping it is incredibly difficult. More things to do get added, but it seems that nothing gets taken off. This is equally true of “improvement schemes.” I recall a company that had active people in various improvement initiatives. There was the “Workout” group. There were the TQM people. There were the Six Sigma folks. (It took me a while to realize that the TQM and Sigma people considered each other competitors, where I had initially lumped them in together.) Then there were the “Lean guys” who had just come in. There were also pockets of Theory of Constraints believers, the agile guys, everyone saying they had “the answer.”

Back to NASA.

Landing a person on the moon by the end of the decade was a clearly articulated vision for accomplishing the high level mission of becoming “the world leader in space exploration.” That was the hoshin.

After a round of “catchball” a strategy was selected from the options available. Note that the catchball didn’t negotiate the goal. That was stated. The question was not whether to do it, but how to do it. The strategy was Lunar Orbit Rendezvous (LOR). They committed to the strategy and ceased all distracting activity to focus 100% of their energy on getting it done.

To make LOR work, they had to learn three things:

  1. Can people stay and work together in space for the 10-14 days required for the trip?
  2. Can people work outside the spacecraft in protective suits?
  3. Can one space vehicle locate and dock with another?

We do these things routinely today, but in 1961 nobody knew the answers.

These three things were the ONLY major objectives of Project Gemini.

The fourth big task was to develop the Saturn V as well as the facility to assemble and launch the rockets.

This goal is very sticky.
Any time one of the hundreds of thousands of Team Members working at NASA and in the contractors had a decision to make, the criteria was simple: “Will this action help the effort to put a man on the moon by the end of the decade?” If the answer was “No” then don’t do it. Great idea. But don’t do it. We don’t have the time or energy for the distraction.

The second thing it did, and this is even more important, is in the face of major setback – the Apollo 1 fire in January 1967, the organization was able to recover, regroup and stay on course because they had a sense of destiny. There was a clear goal, and they were working to meet it. It provided a compass that pointed the way when all other navigational references were blacked out.

Contrast this with the way NASA has been run during the Shuttle era. The massive amounts of energy involved in space travel mean this is, and is likely to remain, a risky business. But in the shuttle era, the tragedies seem to have created doubt and loss of confidence. There is no higher purpose other than space flight for its own sake. They are running it like a business.

“But we ARE a business! you may say. Sure you are. But the truly excellent businesses, those with the ability to adapt to changing situations quickly and recover are the ones whose sense of “self” transcends quarterly profits and financials. They are successful because they stand for something more.

A few years ago I remember standing outside in the Seattle area during an earthquake that lasted close to a minute. It was an unsettling experience because the ground itself was moving. Leadership’s job is largely providing a sense of solid ground so everyone else can operate without feeling off balance. This is done with very clear goals that are

  • Simple to understand.
  • Unexpected – they compel attention
  • Concrete – they can be seen, touched, felt.
  • Credible – they make sense in the larger context.
  • Emotional – they appeal to people’s feelings and
  • have Stories – they can be communicated in a way people can visualize.

Kitchen sink “KPI” lists don’t do this.

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Long Term Vision vs. Short Term Thinking

Gabriela asked some good questions in a comment on “More Short Term Thinking.”

One of her questions was about Toyota’s apparent lead in hybrid cars. Was it luck, or was it planned?
One answer to that question is in Liker’s book The Toyota Way when he discusses their product development system, specifically using the Prius as an example. They didn’t set out to build a hybrid car. Rather, the goal was to radically improve fuel economy. A lot of things were tried, and hybrid technology just emerged as the way to go. It was, without a doubt, a huge risk.

In 2005, the analysts were skeptical.
May 11, 2005, in The New York Times:
Profit Plunges at Toyota as It Vies for Market Share
From the article:

High gas prices have helped Toyota sell more small cars, like the Corolla sedan and the compact cars in the Scion line. And sales of the gas-sipping Prius hybrid sedan have more than doubled in recent months compared with last year. But analysts say the added sales have not helped Toyota’s bottom line as those vehicles tend to be less profitable than S.U.V.’s and big sedans.

“Even though Toyota’s market share is growing fantastically, Toyota’s profitability is actually in somewhat of a stagnant period,” said Takaki Nakanishi, an auto analyst at UBS Securities Japan.

and from another section:

But Toyota’s heavy investment outlays and its focus on smaller, less profitable vehicles raise questions about whether Toyota managers are more concerned with gaining market share than with increasing profits, said Mr. Nakanishi of UBS, who noted that Toyota’s profit margin had fallen for each of the last three quarters.

Clearly, the profit focused analysts were questioning the heavy R&D commitment to fuel economy when the big profits were clearly in the big SUVs and trucks.

Keep in mind, of course, that this “plunging profit” was still 2.5 billion dollars for the quarter at a time when GM and Ford were showing record sales and recording record losses.

OK – now fast forward
Today, all indicators are that Toyota’s profits are down, just like everyone else’s. But they aren’t recording losses, just earning less than they had. The demand for the Prius has outstripped their battery supplier’s ability to produce, at least in the short term, and they have been able to raise prices on it and other high-mileage models.

Honestly, my opinion is that they developed the hybrid more as a long term commitment to pushing “greener” transportation technology, and as a platform from which to develop other things. I don’t think anyone honestly saw the surge in fuel prices.

Nevertheless, I would contend that Toyota’s generally conservative approach and keeping their eye on the long term serves them better than trying to please the analysts. What we have here is simple: They bucked what the analysts were saying. GM did exactly what they were saying. GM put all of their proverbial eggs into the high-profit big trucks and SUV’s, and they don’t really have a Plan B right now.